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This purpose of this paper is to examine the implications of the Revised Malaysian Code on Corporate Governance (2007) toward the effectiveness of the board and audit committees in Malaysian manufacturing companies. Since the manufacturing firms are dominantly held by Chinese firms, this paper is extended to incorporate the implication of ethnicity on board and audit committees’ effectiveness.

Using a sample of 201 firms from fiscal year 2004-2009, the data set consists of a total of 1,206 firm-year observations. Analysis is carried out using correlation analysis, multiple and logistic regression analyses.

The findings reveal that board and audit committees’ effectiveness is positively associated with earnings management pre- and post-Revised Malaysian Code on Corporate Governance (2007). A higher number of ethnic members in the board are also positively associated with earnings management.

This study is limited to some industries in the manufacturing sector due to the special characteristics of this sector and covers mostly large firms. The results may not therefore be applicable to small firms. Finally, the study does not consider possible interaction between the board and audit characteristics which may be significant in influencing earnings management.

The findings show that the corporate governance mechanism in Malaysian firms is currently inadequate in preventing earnings management and extra effort is needed to improve board governance.

This paper contributes to the current literature on the issues of corporate governance effectiveness and board ethnicity in the current economic and political structure in Malaysia.

The purpose of this study is to investigate the association between audit committees’ characteristics and firms’ risk in Malaysian manufacturing firms.

The effect of audit committees on firms’ risk is investigated by 930 firm-year observations between the fiscal years of 2004 and 2009 of Bursa Malaysia listed firms during the global financial crisis. Panel data regression analysis is used to analyze the relationship.

The findings of this study indicate that audit committee’s independence reduces firms’ risk. Nonetheless, across various analysis, the authors fail to associate audit committee’s qualification and membership in professional bodies with firms’ risk. Consistently, the authors find that family ownership is negatively associated with IDIOSYNCRATIC risks, supporting previous studies claim that family firms are more risk averse than non-family firms.

The analysis is confined to Malaysian family manufacturing sectors during global financial crisis 2007–2008.

This study offers insights into the importance of audit committees’ qualification and knowledge in Malaysian family manufacturing firms in reducing firms’ risk and providing stability to investors investment.